A bizarre case in Bild: Entrepreneur loses residency status over 190 euros

An entrepreneur has lived in Germany for more than ten years, runs his own limited liability company (GmbH), employs a dozen people, and has never received social benefits. Nevertheless, he is being asked to leave the country. The reason: According to calculations by the [relevant authority/body], his managing director's salary exceeds [a certain threshold]. The immigration office is deducting €190 per month from his living allowance. The Bild newspaper reported on this case from Leipzig in May 2026, and the Leipzig Administrative Court heard the case. What sounds like a curiosity is actually a cautionary tale for all foreign entrepreneurs and Self-employed people in Germany – also for entrepreneurs from the USA , Great Britain and Canada, which are connected with a GmbH and a Those who are employed here with a residence permit according to § 21 of the Residence Act.

What happened in the Leipzig case?

The Ukrainian entrepreneur has lived in Saxony since 2013. He founded a limited liability company (GmbH) that organizes nationwide return transport of cars for large car rental companies and received a His residence permit for self-employment was valid until 2016. In August 2016, he applied for an extension in a timely manner – and then, according to his own account, heard nothing from the authorities for years. It wasn't until May 2024 that the Saxon State Directorate rejected his application for continued residence. The reason given: the business "did not demonstrate a sound business idea," and the public interest in terminating his residence permit outweighed his personal interests.

Before the Leipzig Administrative Court, the representative of the The immigration authorities then focused primarily on the plaintiff's income: he paid himself a managing director's salary of €1,500 per month, resulting in a shortfall of €190 per month to cover his living expenses. This contrasted with the fact that the company employed four full-time staff and several part-time workers, predominantly Ukrainian refugees. The judge suggested a settlement, and the plaintiff's lawyer proposed a temporary solution – the authorities rejected this and insisted on a judgment. A decision had not yet been announced at the time of this report.

What role does a secure livelihood play for self-employed people?

The According to Section 5 Paragraph 1 Number 1 of the Residence Act, a secure livelihood is a general requirement for the issuance of almost every residence permit – including for the extension of a Residence permit according to § 21 of the Residence Act (§ 8 para. 1 of the Residence Act). It is secured according to § 2 para. 3 of the Residence Act if the foreigner can support himself/herself, including sufficient health insurance coverage, without recourse to public funds.

A crucial detail that many founders overlook is this: the authorities don't ask whether you actually receive social benefits, but whether you would theoretically be entitled to them. They perform a hypothetical needs assessment – based on the standard allowance according to social law, and the actual needs of the individual. Rent , contributions to Health insurance , and any applicable allowances for employed individuals, are taken into account – and compared to net income. If the income is lower, the livelihood is considered insecure, even if the person has never received a cent from the state. This explains the calculation with the 190 euros.

Why is a low CEO salary a typical trap?

In our consulting practice, we see this pattern regularly. Managing directors who are also shareholders of a GmbH (limited liability company) often deliberately set their own salaries low – for tax reasons, to maintain liquidity within the company, or because part of their living expenses come from savings, a partner, or future profit distributions. From a business perspective, this is often sensible. However, from an immigration law standpoint, it can be disastrous, because the The immigration authorities primarily look at what is written in black and white in the pay slip and tax assessment.

There is certainly room for argumentation in this regard. Income from profit distributions, substantial assets, or the income of a Spouses can be included in the calculation, depending on the circumstances. Furthermore, Section 5 Paragraph 1 of the Residence Act (AufenthG) is a general requirement: exceptions are possible in atypical circumstances. The fact that someone has lived for years without social benefits and has even created a dozen jobs is a strong argument for such an exception. However, these arguments must be presented in a timely manner and with supporting evidence, not just in court.

What does the "lack of a business idea" mean for the extension of the residence permit under Section 21 of the Residence Act?

For the granting and renewal of a Section 21, paragraph 1 of the German Residence Act (AufenthG) requires that a residence permit for self-employment exists, that the activity is expected to have a positive impact on the economy, and that financing is secured. For initial issuance, this is based on a forecast. For renewals, the forecast is replaced by reality: Then, what matters is whether the company has actually generated revenue, created jobs, and paid taxes. In our assessment, a business that has been operating for over ten years and offers several jobs subject to social security contributions generally meets these criteria – regardless of whether a case worker personally finds the business model convincing.

Furthermore, Section 21 Paragraph 4 of the Residence Act states: Anyone who has been successfully self-employed for three years and secures their livelihood can already obtain a permanent residence permit. Had the Leipzig entrepreneur restructured his income situation earlier, he might have had indefinite residence rights for years already.

What happens if the authority fails to make a decision for years?

Those who apply for the extension in time before the expiry of the Having applied for a residence permit , one remains legally in the country according to Section 81 Paragraph 4 Sentence 1 of the Residence Act – the existing residence permit remains valid until a decision is reached (legal fiction). This protective effect is valuable, but carries a risk: the longer the authorities wait, the more time they have to later scrutinize every detail of the past. Eight years without a decision is extreme, but we also see waiting times of several months or even years with a legal fiction certificate. The State Office for Immigration in Berlin repeatedly.

Legally, those affected do not have to accept this. According to Section 75 of the German Administrative Court Procedure Act (VwGO) , an action for failure to act is generally possible if the authority does not decide within three months without sufficient reason. Such an action compels the authority to make a decision – at a point in time when the applicant can still prepare their own documents.

What lessons should foreign entrepreneurs draw from this?

The real message of the case is: A successful business does not automatically protect against the loss of residency rights . The immigration authorities do not assess your business success from an investor's perspective, but rather whether the legal requirements for your application are fully documented. Anyone who relies on standard information from the internet, submits an extension application without preparation, or interprets the authorities' silence as a good sign is taking a risk that often only becomes apparent years later.

We recommend that founders and managing directors with a For a residence permit under Section 21 of the German Residence Act (AufenthG), it is therefore essential to consider the minimum income threshold for residency when setting the managing director's salary, to verify the authority's needs assessment before the renewal date, and to document revenue, jobs, and investments in a structured manner. We have numerous Self-employed individuals – especially when it comes to The Berlin State Office for Immigration – we guide you through extension and settlement procedures and know exactly where the caseworker scrutinizes the calculations. If your application is rejected, we will review your appeal, legal action, and request for preliminary injunctions, and represent you in the process. legal proceedings .

Conclusion

The Leipzig case shows how formal the right of residence is in cases of For the self-employed, it works: twelve jobs and decades of foregoing social security benefits are weighed against a calculated shortfall of €190 per month. The Leipzig Administrative Court's decision remains to be seen. However, for foreign entrepreneurs, the following already applies: their own income is not purely a tax issue, but also a matter of residency status. Those who strategically prepare their residency renewal and take action if the authorities fail to act can avoid having their life's work derailed by a mere formality. Contact us before the authorities start recalculating.